City Of Tulsa Doesn't Expect To Collect $4 Million In Sales Tax Owed

The City of Tulsa is due $4 million in sales tax that it doesn't ever expect to collect; most of it from businesses that have closed down. And, there's another $1 million in taxes dues from businesses that are open that haven't paid it.

It's another hole in the budget while the city is cutting back. In fact, the budget crunch means they're likely to cut back on audits that city hall uses to figure out who isn't paying.

Whenever someone buys something at a store the city is supposed to get sales tax out of the deal, but that doesn't always happen, and those pennies in missed sales tax add up to millions of dollars the city can't collect.

Tulsa Sales And Use Tax

"We don't expect to collect any of that honestly," said Stan Jones, with the City of Tulsa Treasury.

The city treasury department reports the most delinquent group owes $4 million.

The Sales Tax Overview Committee, a watchdog of city spending, wanted to know why there's not more of an effort to collect.

"If the money does not come in they can't do anything about it. The city employees don't have any recourse; the state is supposed to be collecting it and sending it back to the city," said Karen O'Brien with the Sales Tax Overview Committee.

But the city is now checking businesses that suddenly stop paying, and most often finds they've closed down. But when they checked 88 businesses that stopped paying, 14 were still open.

Outstanding Balance As Of December 2013

Through audits of business records, the city has collected $311,000 so far, and found another $200,000 in payments that are being challenged. The city collected $631,000 last year by just questioning sales tax payments from 45 businesses.

The city can only identify the problem; it's up to the state to collect.

"Any of these results we find through compliance we report it to the Oklahoma Tax Commission and we expect them to follow up on it," Jones said.

He told the sales tax committee that, while enforcement is improving, it's likely money that's long overdue and will never be paid.

The city said inspectors actually go out and check about 50 businesses a month. With 8,500 businesses in Tulsa, that's a small percentage, but the city also believes most businesses are doing the right thing.